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VAS

Strike cost economy billions in lost revenue

BUSIA
By | January 10th 2010

By Kenfrey Kiberenge and Joe Kiarie

When more than 45,000 Public Service Vehicles (PSVs) were pulled off the roads last week, business countrywide came to a near standstill for the two days.

It was not just about millions of Kenyans walking to work, but also about financial losses.

According to Matatu Welfare Association chairman Dickson Mbugua, the matatu industry lost Sh720 million over the two days the public service vehicles remained off the roads.

He estimated that the economy lost between Sh130 million and Sh150 million.

The MWA chairman also notes that police were denied at least Sh4.5 million that they could have pocketed in bribes.

But economic experts say the impact on the economy was far-reaching. Mr Kariithi Murimi, the Finance Officer at Kenya Private Sector Alliance (Kepsa), told a local TV station that the economy lost Sh1 billion on the first day of the strike. This could mean Sh2 billion was lost over the two days.

Of the Sh1 billion lost, fares accounted for Sh350 million, communication and vehicle repairs accounted for Sh300 million, while other services accounted for an estimated Sh350 million.

And the expert notes that the effects might be felt in future.

SH1B Lost

"The fuel levy, for example, goes towards maintenance. So, that portion of maintenance that would have been done with that money will not be done," he said.

According to the 2008 economic survey, the matatu sector generates about half a billion shillings daily. Sh1 billion was thus lost over the two days of the strike, while losses of a similar amount were incurred by service sectors that rely on the matatu industry.

These include agriculture, the jua kali, energy, manufacturing and hotel sectors. The education sector also felt the impact since the strike coincided with schools re-opening.

The effects started taking toll on the economy on December 31, a day after matatu owners issued the strike threat.

Scores of travellers were forced to cut short their Christmas and New Year festivities in Mombasa to return home to avoid being caught up in the crisis.

And according to a comprehensive report prepared by the Kenya Bus Service, the effects of the strike were far reaching due to the long list of illegal beneficiaries.

KBS Managing Director Edwins Mukabanah says it is estimated that all PSVs lose about Sh54 million per day to illegal channels, meaning that they were denied up to Sh108 million over the two days.

Illegal Gangs

He says illegal gangs, police, touts, cartels and theft by crews cost each matatu about Sh200 daily. Local Authorities parking fees and Kamjesh take Sh50 per matatu while squad crew cost each matatu Sh100.

The matatu sector has grown rapidly since 2004. According to the Economic Survey 2009, earnings in 2008 stood at Sh125 billion compared to Sh121 billion in 2007, with the operators unscrupulously passing on the increased cost of operations to commuters.

Matatu operators downed their tools to protest against harassment by traffic police —clampdown on noisy matatus and unroadworthy vehicles following an order by President Kibaki on Jamhuri Day. The operators claimed the police took advantage of the order to extort bribes and force those who did not comply off the road.

They ended the strike on Tuesday evening after a meeting with Prime Minister Raila Odinga. And on Thursday, the PM set up an inter-ministerial taskforce to look into the issues raised by the operators and directed them to return to him with a report after a week.

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